Problems with interpreting the unemployment rate as a measure of labour market tightness include
A)discouraged workers and variations in how intensively the unemployed search for work.
B)the rental vacancy rate.
C)biases in the CPI and dissatisfied workers.
D)variations in how intensively the unemployed search for work and biases in the CPI.
E)dissatisfied workers and discouraged workers.

Question

Quizplus · Accepted Answer

The unemployment rate may not fully capture labor market tightness because it doesn't account for discouraged workers (those who have stopped looking for work and are therefore not counted as unemployed) and variations in the intensity of job search efforts among the unemployed. These factors can distort the true picture of labor market conditions.

Problems with Interpreting the Unemployment Rate as a Measure of Labour